Owing to a loophole in the Copyright Act, streaming services like Pandora, Spotify, and Google are able to avoid paying royalties to songwriters and publisher by filing "address unknown" notices of intent when obtaining compulsory licenses. Here we look at five things Congress could do in service of closing this loophole.
Guest post by Chris Castle of Music Tech Solutions
Copyright reform is on the front burner again after the passing of the Register of Copyrights Selection and Accountability Act by a vote of 378-48. But there’s another problem the Congress needs to fix that won’t require legislation in the short run: The mass filing of tens of millions of “address unknown” notices under the archaic compulsory license for songs.
I’m going to assume that readers know the general background on the millions of “address unknown” NOIs filed with the Copyright Office under a loophole in the Copyright Act (Sec. 115(c)(1)). If that is Geek to you, see my recent paper on mass NOIs for more complete analysis (or previous posts on MTS for the armchair version of the story. The first distinction to remember is that we are only concerned in this post with song copyrights and not the sound recording. This story implicates songwriters and publishers, not artists and record companies, and it only applies to the government’s compulsory license for songs, a uniquely American invention.
In a nutshell, Amazon, Google, Pandora, Spotify and other tech companies are serving on the Copyright Office tens of millions of “address unknown” notices of intention to obtain a compulsory license to make and distribute recordings of certain types of songs. Under what can only be called a “loophole” in this compulsory license, a service can serve these “address unknown” NOIs on the Copyright Office if the owner is not identifiable in the Copyright Office public records. The Copyright Office stands in the shoes of the “address unknown” copyright owner to receive and preserve these notices.
On the one hand companies like Amazon, Google, Pandora and Spotify say that they can’t find these millions of song owners, while at the same time at least some of the same companies brag about how comprehensive and expensive their song databases are (like Google’s Content ID) or their agents puff up the agent’s own massively complete song databases as “the worlds largest independent database of music copyright and related business information.” And yet, these same companies and their agents can’t seem to find songwriters whose names, repertoire and contact information are well known, or whom they already pay through their own systems or through their agent.
The Database Double Loophole Trick
Here’s the loophole. First, the loophole requires a very narrow reading of Section 115(c)(1) of the Copyright Act, a 40 year old statute being applied to NOIs served at a scale the Congress never intended. If the song owner isn’t found in the public records of the Copyright Office, even if the digital service or its agent has actual knowledge of the song copyright owner’s whereabouts, the digital service can say they are not required to look further.
Even if you buy into this willful blindness, these digital services may not be looking at the complete public records of the Copyright Office. The only digitized records of the Copyright Office are from January 1, 1978 forward, and my bet is those easily searchable records are the only records the services consult. That omits the songs of Duke Ellington, Otis Redding, The Beatles and five Eagles albums not to mention a very large chunk of American culture.
The Copyright Office records from before 1978 are available on paper, so the pre-78 songs are still in the public records (which is what the Congress contemplated in the Copyright Act).
The identifiers are just not “there” if you decide not to look for them. However, it is not metaphysical, it is metadata that exists in physical form. This is the “double loophole”.
The Double Triple: New Releases
Another category of song copyrights that will never be in the public records of the Copyright Office in their initial release window are new releases with recently filed but not yet finalized copyright registrations. The Copyright Office itself acknowledges that it can take upwards of a year to process new copyright registrations. This allows “address unknown” filers to bootstrap a free ride on the back of Congress during that one-year period.
No Liability or Royalties Either: Trebles All Round
Once a company serves the “address unknown” NOI on the Copyright Office, songwriters are arguably compelled by the government to permit the service to use their songs. Filing the “address unknown” NOI arguably allows the service to avoid liability for infringement and also–adding insult to injury–to avoid paying royalties. If the NOI is properly filed, of course.
In current practice, a mass “address unknown” NOI is usually a single notice of intention filed with a huge attachment of song titles with the required fields, such as this one Google filed for Sting’s “Fragile”, the anthem of the environmental movement (which was clearly filed incorrectly as the song was registered long ago):
The number of mass “address unknown” NOIs being posted by the Copyright Office on an almost daily basis suggests that tech companies now view mass “address unknown” NOIs as the primary way to put one over on songwriters and the Congress, too. Companies like Amazon, Spotify, Google, Pandora and others are using this heretofore largely unused loophole on a scale that flies in the face of Chairman Goodlatte’s many hearings in the last session of Congress on updating the Copyright Act.
This “address unknown” practice also undermines the efforts of Chairman Goodlatte and Ranking Member Conyers to modernize the Copyright Office. Indeed, based on the very lopsided vote on HR 1695 the Register of Copyrights Selection and Accountability Act, it is clearly the desire of the overwhelming majority of Members of Congress, too.
What Can Be Done?
Congress can play a role in in providing immediate relief to songwriters by stopping the mass “address unknown” NOIs or at least requiring the Library of Congress and the Copyright Office to take steps to verify the NOIs are filed correctly.
At the moment, the government takes away property rights from the songwriters by means of the compulsory license without taking even rudimentary steps to assure the public that the “address unknown” NOI process is being implemented correctly and transparently.
Here are five steps the Congress can take to rectify this awful situation.
- Stop Selling Incomplete Data: Congress should instruct the Library of Congress to stop selling the post 1978 database until due diligence can be performed on the database to determine if it is even internally correct. It appears that many if not all the mass “address unknown” NOI filers use the LOC database to create their NOIs. It is also highly unlikely that this database will include new releases. Congress can simply instruct the Librarian to stop selling the database.
- Stop Accepting “Address Unknown” NOIs With Compressed File Attachments: Congress should instruct the Library of Congress and the Copyright Office to immediately cease accepting “address unknown” NOIs with compressed files as attachments for what appears to be a single NOI. These compressed files are so large in most cases that songwriter can never uncompress them on a home computer to determine if their songs are subject to “address unknown” NOIs. Google in particular is a major offender of filing huge compressed files. Each compressed file contains tens of thousands of song titles.
- Require Accounting Compliance with Copyright Office Regulations: Long standing regulations require that anyone relying on an NOI must file mostly and annual statements of account reflecting usage of the songs subject to the NOIs. The tech companies serving mass NOIs are not rendering these statements and thus fail to comply with the transparency requirements of Copyright Act. All of the “address unknown” NOIs served during 2016 are out of compliance with the regulations, and all “address unknown” NOIs served in the first quarter of 2017 are likewise out of compliance. Congress should instruct the Copyright Office to require monthly and annual statements of account be filed with the Copyright Office for anyone who has relied on these NOIs as required by the regulations. All statements of account should be certified in the normal course as required by the regulations, and made available to the public by posting to the Copyright Office website.
- Require the Library of Congress to Create a Searchable Database of NOIs:Congress should instruct the Library of Congress to create a single database maintained online that is maintained by an independent third party and is searchable by songwriters in a manner similar to a state unclaimed property office. That database needs to be updated on a regular schedule. Given the size of the compressed files served to date, it is essentially impossible for songwriters to determine if NOIs have been filed on their songs. This is particularly true as the NOIs are served on an effectively random basis, so even if songwriters were able to search, they would essentially have to search all the time.
- Pay Royalties Into A Permanent Trust Account: Given that it is highly likely that the mass NOIs filed to date have a significant number of errors, it is also likely that songwriters will become entitled to payment of royalties retroactively if these errors are ever caught. Therefore, the Congress should require that royalties should be paid to a trust account maintained at the Copyright Office and held in perpetuity like a state unclaimed property office. Of course, it is equally likely that the song copyright owners will be entitled to terminate any purported license under 17 USC Sec. 115(c)(6). These payments should be based on actual usage and not black box. This is another reason why the statements for “address unknown” NOIs should be public.
What started in April 2016 as a trickle of NOIs from a handful of companies has now expanded exponentially. Based on Rightscorp’s analysis in January 2017, some 30 million “address unknown” NOIs had been filed–and that did not include the dozens of “address unknown” NOIs filed by Spotify in March 2017 alone which themselves likely total over a million songs.
|Top Three Services Filing NOIs
April, 2016-January 2017
|Number of NOIs Per Service|
|Amazon Digital Services LLC||19,421,902|
|Pandora Media, Inc.||1,193,346|
It is rapidly becoming standard practice for tech companies to try to pull the wool over the eyes of the Congress by leveraging an apparent loophole and they are doing it on a grand scale.
As we have seen with everything else they touch from the DMCA to royalty audits, the tech companies will continue this loophole-seeking behavior until they are forced to stop. Since no one at the Library of Congress seems to have the appetite to right this wrong, the Congress itself must step in.
Ultimately Congress should fix the loophole through legislation, but in the meantime most of the harms can be corrected overnight by policy changes alone.